Silvertards We Ride!

3 days ago

Long Time A Comin'

So back in 2011 I bought a bit of silver. It was at a parabolic top and I guess I wouldn't have made it into crypto without being such a degen. Classic move... and it took 15 years to get vilified! I guess I won't be selling anytime soon to make sure that all the gain turn to pain soon as well...

The chart looks absolutely insane atm, especially on a linear one:

It's obvious that now is the right time to sell, right? I mean in crypto we call this a moonshot and we would pat ourselves on the back and tell each other that "we made it". But doubts are already creeping in as to whether this actually is the right time to sell... And no, it's not just FOMO talking and delusional projections - at least that is what I am telling myself.

You see, the silver picture changes quite a bit when we look at a bit more context. For instance, when adjusted for inflation, the silver chart looks dramatically different. In this case, we had a top in 1980 at around 0.61 (silver/CPI). The top in 2011 was around 0.21. In only the last few months the ratio jumped from 0.1 to over 0.31 and is now sitting between the two former peaks.

We can see that we haven't really seen an ATH here. There is still around a 100% more to go. Of course this doesn't really tell us how high that ratio could go, just that the price of silver hasn't actually peaked when accounted for the loss of value of fiat.

On X I saw someone converting this into $ terms so we can see the actual fiat value with today's dollar value. The two peaks at around $50 in 1980 and 2011 then become $600 and $130 respectively. I guess this alone is already a pretty good case for silver as we can see just how much value fiat loses over time. But it also shows us that a new ATH for silver would be north of $600! That seems... a bit much?

Would that even work? Gold has around $35 trillion MC and silver around $6 trillion. A 6-8x would put silver at around $42 trillion! Gold would of course move along with that (but probably not nearly as much). While this could theoretically happen, we do have to ask ourselves: where would that kind of money come from? The obvious answer of course is that fiat would be in total shambles and the M2 money supply would be flying through the roof...

I suppose at that point the financial system would be broken beyond repair and we would be close or already in a transition into a new monetary system... But that's actually the point of metals: to be prepared for this kind of scenario. In a way it seems to me that while this target is a real possibility I am not sure what we could even buy in that kind of a market. Would we even want to trade it back into worthless fiat?

The GOLD to Silver ratio suggests that a ratio of around 40 might be a turning point. This is only the third time that we have seen such a steep decline int he ratio and every time it has also led to a very fast recovery.

While that doesn't tell us anything about how high silver will go in $ terms, it could suggest a good counter trade into gold again.

Interestingly, I also saw someone pointing to a cup and handle pattern with a price target that would favor the $600+ one. In fact, it really does give us the exact same target of $600-$700.

Conclusion

While the linear and even the log chart screams "sell!", the other charts make this rally seem less dramatic. Since nobody wants to be another bag holder for the next ~30 years (!), it might be a good idea to slowly sell into the rally. The bigger question relates to our entire global financial system and geopolitical situation and in such turbulent times, metals have always been a safe haven. So in essence, I am not really sure what to do myself. While I already have a lot of bags in crypto, I don't really want to become another bag holder of metals as well.

note: the images here are pulled from X and can easily be found there

As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!